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Question 3: Which of the following is the best definition for a junk bond? A. A bond that is rated as below investment-grade by rating
Question 3: Which of the following is the best definition for a junk bond?" A. A bond that is rated as "below investment-grade" by rating agencies B. A bond that has declined dramatically in value C. A bond that has defaulted D. A bond that is not regulated E. Don't know/Not sure Question 4: Which of the following best explains why many municipal bonds pay lower yields than other government bonds? A. Municipal bonds are lower risk B. There is a greater demand for municipal bonds C. Municipal bonds can be tax-free D. Don't know/Not sure Question 5: Your uncle would like to limit his interest rate risk and his default risk, but he would still like to invest in corporate bonds. Which of the possible bonds listed below best satisfies your uncle's criteria? A. AAA bond with 10 years to maturity. B. BBB perpetual bond. C. BBB bond with 10 years to maturity. D. AAA bond with 5 years to maturity. E. BBB bond with 5 years to maturity
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